CANADA FX DEBT-C$ hits a fresh 2-week low on domestic data

* Canadian dollar at C$1.3351, or 74.90 U.S. cents * Loonie touches its weakest since Jan. 4 at C$1.3388.

* Bond prices higher across much of the yield curve By Fergal Smith TORONTO, Jan 20 (Reuters) - The Canadian dollar weakened to a fresh 2-week low against its U.S. counterpart on Friday, pressured by weaker-than-expected domestic inflation and retail sales data just two days after the Bank of Canada left the door open to cutting interest rates.

Canada's annual inflation rate rose to 1.5 percent in December from November's 1.2 percent, short of analysts' forecasts for an increase to 1.7 percent, data from Statistics Canada showed.

Retail sales edged up 0.2 percent in November, which was shy of economists' expectations for an increase of 0.5 percent.

"These numbers are not going to help the (Canadian) dollar, that's already on its back foot and I don't think it really changes the (Bank of Canada's) view of things," said Doug Porter, chief economist at BMO Capital Markets.

On Wednesday, the Bank of Canada warned that a rate cut remained on the table, warning there would be "material consequences" if U.S. President-elect Donald Trump enacts protectionist policies.

The U.S. dollar recouped earlier losses ahead of Trump's inauguration and a speech that could shed some light on his economic policies.

At 9:24 a.m. ET (1424 GMT), the Canadian dollar was trading at C$1.3351 to the greenback, or 74.90 U.S. cents, weaker than Thursday's close of C$1.3314, or 75.11 U.S. cents.

The currency's strongest level of the session was C$1.3285, while it touched its weakest since Jan. 4 at C$1.3388.

The implied probability of a Bank of Canada interest rate hike this year fell to 26 percent from 35 percent before the economic reports, data from the overnight index swaps market showed.

"I think previous market pricing was too optimistic on the Bank of Canada, so I think we are moving toward a more realistic setting," said Andrew Kelvin, senior rates strategist at TD Securities.

Still, he expects the central bank to be comforted by core inflation measures that are "trending a bit higher" and retail sales volumes that climbed.

Canadian government bond prices were higher across much of the yield curve, with the two-year up 4.5 Canadian cents to yield 0.767 percent and the 10-year rising 17 Canadian cents to yield 1.741 percent.

The 10-year yield fell 4.7 basis points further below its U.S. equivalent to a spread of -74.5 basis points.

U.S. crude prices were up 2.49 percent at $52.65 a barrel ahead of a producers' compliance meeting.

Oil is one of Canada's major exports.

(Editing by Bernadette Baum)